What Is a Multiple Security Deposit MSD and How Does a MSD Work
Multiple security deposits (MSD) is offered by most leasing companies, however, not many lessees and dealers know about the MSD program available to many consumers with less than excellent credit (< 700 FICO score) required to get the best interest rates (aka lowest money factors). Some manufacturers will allow you to pay MSDs to lower your interest rate (money factor) on your lease. If a multiple security deposit program is available, you usually pay more than one security deposit (equal to one month’s payment and in some cases, one month’s payment rounded up to the nearest $50). The amount in which your interest rate lowers by each security deposit varies by leasing company, but the lower interest rate results in a lower monthly payment. Remember, a multiple security deposit is not a down payment. At the end of the lease you will receive your MSDs.
For example, if I’m not mistaken, Infiniti offers an MSD program that allows a lessee to pay up to nine security deposits. For each MSD you give to Infiniti, your money factor goes down by 0.0001 (or 0.0001*2400= 0.24%). This means your monthly payment will decrease and you get your security deposit back at the end of your lease. Let’s say the monthly payment is $400 a month. You pay 9 security deposits at $400 each or $3600 at the time of signing the car lease agreement. This is not a down payment. Your money factor gets lowered accordingly and thus you pay the adjusted lower monthly payment. The difference between a MSD and a down payment is that at the end of the lease you get your MSD returned while a down payment is applied towards your lease price of the car.
If you go to your dealer and your dealer says that the MSD program is not available, they could be telling the truth. Or they are denying you the option because it’s simply more work on their part to get this process started with the financing company.